Ontario's Energy Prices Rise to Curb Use
Pricing Strategy May Be Leading to Energy Poverty for Ontarians
Sep 4, 2008
On August 14th, 2003, a major blackout took effect across the eastern seaboard. Various theories emerged as to what happened, but most or all of the province of Ontario (Canada) and several states were left in the dark for at least 24 to 48 hours. This experience left many people more conscious about the power they consume.
In 1999-2000, the Ontario Government broke up the monopoly of Ontario Hydro and allowed other companies to compete for the delivery of heating fuel and electricity. The delivery of energy supply was privatized. Between the late 1990’s and 2002, the price of electricity spiked to a point that many consumers saw their hydro bills more than double. Letters to the editor repeated stories about how families would “freeze in the dark” and stay away from home, but still paid $500 for hydro.
Industrial users were forced to cut back and lay off staff. Seniors worried about staying in their homes. Families were forced to choose between buying groceries and paying hydro. The outcry of consumers was so loud then, that then Premier Ernie Eves moved to limit the cost of electricity to protect consumers from price spikes, as well as made it illegal for local utility providers to cut service to any household during the winter for failing to pay hydro bills.
This worked only for awhile. The consumption of electricity became unsustainable to the point where taxpayers were subsidizing the cost of energy. Local utilities were losing money due to people refusing to pay hydro bills over the winter months, because they knew their utilities could not be cut off. Consumer demand for electricity the following summer was at record highs with air conditioning, dishwashers and other appliances keeping the turbines running.
When the power came back after the Blackout of 2003, consumers were warned about over-consumption. Many stores kept air conditioning on low and turned off unnecessary lights. Many office towers turned down their lighting after hours. Letters to the editor pointed to energy hogs that ran their air conditioners day and night, left lights on or office buildings that were still lit up like a Christmas tree at two o’clock in the morning.
Dalton McGuinty’s Liberal Government was elected in the fall of 2003. Shortly after its election, this Government championed the consumer paying the full cost of electricity. The increase would be gradual as consumers learned to conserve and acquired energy saving appliances. The cap on the price of electricity per kilowatt hour was lifted in favour of allowing the regulator Ontario Energy Board to make pricing decisions.
Smart metering is being introduced across Ontario. Households with a “smart meter” could tell how much they are paying for electricity at any time of the day and ostensibly choose the best time to run a dishwasher, clothes dryer and other heavy duty appliances. Smart metering favours households that are absent most of the day and during peak hours but return early evening and use their heaviest load of energy between the hours of eight o’clock pm and two in the morning.
However, with increased energy prices, Ontario is seeing more energy poverty. It is said that approximately 18% of households spend more than ten percent of their incomes on energy. More tenants are required to pay heating and hydro directly. Others see increased costs reflected in higher rents. A number of manufacturing companies, mills and plants reduced staff or closed their doors due to increased hydro costs.
The Government must strike a balance between encouraging over-consumption, while at the same time reducing energy poverty and impact of prices on industry.
